By the mid-1800s, socialists had initiated an attempt to show that the industrial revolution and concomitant rise of free trade had worsened the lives of British workers. Great Britain’s adoption of free trade internationally with the repeal of the Corn Laws in 1846 only made detractors more determined to show that a society built on private property and free exchange did not improve the general lot of workers. For years historians taught this as fact. But modern scholarly research has shown that this simply was not true.
Unfortunately, myths tend to persist. Some contemporary historians continue to believe and teach that the industrial revolution harmed, rather than helped, workers. Government officials and others, not understanding the true nature of the industrial revolution of the last half of the eighteenth and first half of the nineteenth centuries, continue to call for restrictions on internal and international trade to improve the well-being of their citizens. These individuals would do well to read the collection of essays, primarily from The Freeman, that Burton W. Folsom, Jr., has assembled in this volume.
The book is divided into three sections: Theories and Theorists, The Industrial Revolution and Its Consequences, and The Case for Free Trade. In the first essay on theory, Murray Rothbard points out the similarities between mercantilism and Keynesianism and then describes a number of the restrictive practices that mercantilists employed which were incompatible with the industrial revolution and free trade. John Montgomery’s essay on Adam Smith describes how The Wealth of Nations undermined the legitimacy of mercantilism and led to the development of a science of economics focused on freedom and free trade. Smith provided the intellectual foundations and legitimacy for the industrial revolution already underway in Great Britain and for the breaking down of trade barriers. Nick Elliott’s and John Chodes’s essays on John Bright and Richard Cobden describe two individuals at the center of the movement toward free trade in nineteenth-century Britain. They focus on Bright and Cobden’s successful battle for the elimination of restrictive British trade practices, most importantly the cessation of the Corn Laws. Henry Hazlitt’s essay describes how Marx took the labor theory of value from Smith and Ricardo and developed it into a theory of the exploitation of the worker. It was the development of the theory of marginal productivity that overturned the labor theory of value and strengthened the case for capitalism and free trade.
The essays in the second section of the book examine the nature and consequences of the industrial revolution. Ludwig von Mises points out that the true facts about the industrial revolution show that the rise of the British factory system improved the lives of the workers who came to the factories and created cheap goods to improve the lives of people in general. It was not the case that government interference brought about these improvements. Lawrence W. Reed shows that the problem with child labor was one of apprentices in the custody of parish government officials, not free voluntary labor. F. A. Hayek makes it clear that the industrial revolution began in the eighteenth century and was probably a by-product of the increased freedom brought about by seventeenth-century limitations on government power. Any deplorable conditions in the Midlands manufacturing populations of the 1830s and 1840s cannot be attributed to the industrial revolution.
Although many Christian leaders seem to deplore capitalism, James Gwartney argues that Christians would do well to defend an economic system that reinforces Christian virtues, improves living standards, and provides for minority views. James Robbins describes how capitalist technology saved the whales, while Stephen Gold shows that the improvements brought about by capitalist market developments facilitated the decline of infectious diseases. Bettina Bien Greaves argues that the true liberation of women was brought about by the market advances and economic growth of capitalist societies. George Winder shows how Ferdinand de Lesseps struggled to privately build the Suez Canal against the desires of the most powerful government in the world, and how government support was only forthcoming after the canal had demonstrated its profitability and importance to world commerce. Robert A. Peterson argues that Hong Kong, Southeastern Asia’s jewel of capitalism, is further demonstration of the importance of free-market economics.
The final section of the book presents essays that make the case for free trade. Donald Billings and Ellis Lamborn consider the arguments for subsidization and protection of domestic industries against foreign competition. They cite Frederic Bastiat’s satiric plea to the French government in 1846 to protect French producers of lighting and lighting equipment from the sun. Steven Daskal argues that free trade inevitably brings prosperity and needs to be applied on a global scale. Thomas J. DiLorenzo demolishes ten common myths that politicians have used to justify protectionism. Hans Sennholz explains how protectionism does not reduce unemployment, while John Finneran recounts how the Irish potato famine helped Robert Peel’s government end the Corn Laws. Jo Kwong explains how free trade and environmental concerns are not antagonistic and S. J. Cicero takes a closer look at dumping as a justification for protectionism. In the final essay, Mark Skousen points out that even though some producers may have benefited from recent protectionist moves by the government, consumers on the whole were harmed. He argues that a far better way to provide relief for domestic businesses would be to give domestic tax and regulatory relief to them. Imagine, says Skousen, the economic growth that would ensue with reductions in corporate income and capital gains taxes and with reductions in red tape and streamlined regulations.
Overall this is an excellent set of essays which I highly recommend to anyone who wishes to learn more about the interrelationships between the industrial revolution, the freeing up of trade, and the market system.